Process documentation – content: What is useful, and what isn’t?

Procedural documentation is a key element for companies in ensuring that processes are transparent, traceable and compliant. But what elements does procedural documentation actually comprise? And how can one ensure that the documentation is not merely a formality, but actually offers added value to the company? In conversation with tax adviser Torsten Stockem, a partner at the Düsseldorf-based firm Energiesozietät and an expert in procedural documentation and internal control systems (ICS), host Paul Liese highlights the key aspects and pitfalls surrounding the topic of procedural documentation. In the following article, you can read the key points of the discussion and find out how companies can optimise their processes and minimise risks with well-structured procedural documentation.

Procedural documentation is not a document strictly defined by law, but rather a recommendation derived from the Principles of Proper Accounting (GoBD). In relevant correspondence, the Federal Ministry of Finance (BMF) has highlighted procedural documentation as an important management tool for businesses. This is not merely a matter of meeting formal requirements vis-à-vis the tax authorities, but above all of ensuring that businesses organise their internal processes in a transparent and traceable manner.

Torsten Stockem sums it up: Process documentation is comparable to safety measures in everyday life. Just as one takes safety precautions when climbing onto a roof, so too must a company take steps to ensure that its processes are mapped out safely, accurately and in accordance with regulations. Procedural documentation therefore serves as a tool that ensures compliance whilst also helping to optimise internal processes and identify errors at an early stage.

According to Torsten Stockem, procedural documentation comprises three key chapters, which together form the basis for comprehensive and functional documentation:

A key topic of discussion is the individual nature of process documentation. Torsten Stockem makes it clear that no two sets of process documentation can be exactly the same. This is due to differences in company size, sectors, markets, IT systems and organisational structures. A company operating nationally has different requirements to one operating internationally. Similarly, the ERP systems used vary greatly, ranging from a centralised system with subsidiary ledgers to several parallel systems without automated interfaces.

Procedural documentation must therefore always be tailored to suit individual circumstances. A „one-size-fits-all“ approach dictated by a tool can quickly lead to important details being overlooked or the documentation no longer reflecting reality.

Procedural documentation is not a static document that is drawn up once and then forgotten in a drawer. Rather, it must be continuously updated and adapted to changing circumstances. Torsten emphasises that it is advisable to review the procedural documentation at least once a year to take account of new legal requirements, process changes or technological adjustments.

In larger companies or where processes are complex, it is advisable to appoint a TCMS Officer (Tax Compliance Management System Officer) to take responsibility for maintaining, monitoring and updating the procedural documentation. In smaller companies, this task can also be carried out on a part-time basis by suitable staff members.

Regular staff training is essential in this regard. Procedural documentation should not merely be made available, but actively used to help new staff settle in and keep existing staff up to date. Ensuring that staff familiarise themselves with the procedural documentation should not be a request, but an obligation.

Many companies wonder whether software solutions can handle the creation and maintenance of procedural documentation. Torsten and Paul agree: software can be a useful tool for structuring documentation, providing templates and mapping processes. However, the software must not dictate the structure and content of the procedural documentation. Responsibility for the content and customisation always lies with the company and the relevant specialist staff. This is the only way to ensure that the procedural documentation reflects actual workflows and takes all relevant specifics into account.

Procedural documentation is not merely a document for tax audits, but above all a valuable tool for the company itself. It helps to make processes transparent, uncover weaknesses and identify opportunities for optimisation. Torsten reports from numerous projects that, following the creation and maintenance of procedural documentation, clients often find that their processes have become more efficient, more secure and less prone to errors. The documentation thus lays the groundwork for better collaboration, higher data quality and, ultimately, a reduction in the workload for management, as responsibilities are clearly defined.

The content of procedural documentation is highly individual and depends on the specific circumstances of a company. There is no one-size-fits-all solution. It is crucial that the procedural documentation reflects the organisational structure and workflows, describes the IT systems and their interfaces, and clearly sets out business process solutions.

Procedural documentation is a living document that must be regularly reviewed, updated and actively used by staff. Software can assist in this regard, but must not be the sole determinant of its structure. Organisations benefit from well-maintained procedural documentation through greater transparency, fewer errors and improved compliance. Procedural documentation is therefore not merely an obligation, but above all a valuable tool for improving process quality and safety.

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